Structure of business/organisation

Question 1

Organisational charts

Answer 1

A diagram that shows the hierarchy in a business, usually from top to bottom

Question 2

Span of control

Answer 2

The number of employees (subordinates) from whom a manager is responsible

Question 3

Span of control effectiveness depends on.. (3)

Answer 3

1) The personality of the manager
2) The skills of the subordinates
3) The size of the business

Question 4

Chain of command

Answer 4

The way in which responsibility for employees is organised within a business

Question 5

Levels of hierarchy

Answer 5

The number of levels or layers in a business organisation

Question 6

Delayering

Answer 6

A process of reducing the number of levels or layers in an organisation

Question 7

Delegation

Answer 7

Where responsibility for carrying out a task or role is passed onto someone else in the business

Question 8

Empowerment

Answer 8

Giving employees the power to do their job

Question 9

Tall structure

Answer 9

Mechanistic

• narrow span of control

Question 10

Flat structure

Answer 10

Organistic

• wide span of control

Question 11

Organisation by PRODUCT

Answer 11

Arranging the business according to what each department does

Question 12

Organisation by SYSTEM

Answer 12

Organising according to the different products made

Question 13

Advantage of organisation by system

Answer 13

Specialists can concentrate on what they do best

Question 14

3 Disadvantages of organisation by system

Answer 14

1) Each part may act as a separate entity, concerned with its own agenda
2) It can be difficult to accredit success and/or blame
3) Departments may not be able to clearly see their successes

Question 15

3 advantages of organisation by product

Answer 15

• can see successes and identify problems
• managers can focus energy on one product
• each centre has a lot of autonomy (independence) this increases motivation

Question 16

3 disadvantages of organisation by system

Answer 16

• different products compete for resources this can cause conflict
• duplication of departments can waste resources

Question 17

Matrix structure

Answer 17

Individuals work across teams and projects as well as within their own departments or function

Question 18

Centralised Structure

Answer 18

Decision making firmly at the top of the hierarchy (senior management)

Question 19

2 benefits of centralisation

Answer 19

• easier to implement common policies and practises for the whole business
• prevents other parts of the business from becoming too independent

Question 20

4 drawbacks of centralisation

Answer 20

• more bureaucratic - often extra layers in the hierarchy
• local or junior managers are likely to be much closer to customer needs
• lack of authority down the hierarchy may reduce manager motivation
• customer service, lost flexibility and speed of local decision making

Question 21

Decentralised structure

Answer 21

Decision making spread out to include more junior managers in the hierarchy, as well as individual business units or trading locations

Question 22

7 benefits of decentralisation

Answer 22

• decisions are made closer to the customers
• better able to respond to local circumstances
• improved level of customer service
• can enable a flatter hierarchy
• good way of training and developing
• junior management
• facilitates empowerment

Question 23

5 drawbacks of decentralisation

Answer 23

• decision making not necessarily “strategic”
• harder to ensure consistent practises and policies at each location
• may be some diseconomies of scale
• who provides strong leadership when needed
• harder to achieve tight financial control